Legal Basis Reporting Systemwide Accounting May 2009 Kelly Cox Manager, Systemwide Accounting (562)

Topics  Cash Posting Orders (CPOs)  Bank of CSU Website  Accounting for SWIFT Investments  Interagency Payments  California State University, Risk Management Authority (CSURMA) Accounting  Accounting for Campus Loans  Prior Year Payroll  Reimbursed Activities  Systemwide Revenue Bond Accounting Legal Basis Reporting Systemwide Accounting

Cash Posting Order (CPO)  Mechanism to move SWIFT dollars between campuses and the CO  Examples:  Redemption/Investment in SWIFT (Cash Positioning)  Charge for a product or service  Reimbursement of expenditures  Systemwide Allocation Transfer (SWAT)  Request for Cash Transfer Order (RCTO)  CPO should be recorded exactly as indicated on memo  This will reduce the number of GAAP elimination entries needed.  Notify the CO contact listed on the CPO memo if you are unable to comply with the posting instructions 3 Cash Posting Orders

 Systemwide Allocation Transfer (SWAT)  Supplemental campus funding from the Priority Fund  SWATs may only be used for Operating Funds (CSU Fund 485)  The campus will always record as a SWAT in  Request for Cash Transfer Order (RCTO)  CO department (e.g. Academic Senate) transfers funds to a campus for additional support or reimbursement  RCTO may only be used for Lottery Funds (CSU Funds 481) and Operating Funds (CSU Fund 485)  Operating Funds will be recorded as a SWAT in  Lottery Funds will be recorded as a transfer in Cash Posting Orders

Bank of CSU  If you need copies of CPOs, visit the Bank of CSU website   This site list all the CPOs related to your campus by month with a brief description of the transaction.  Questions on CPOs can be directed to:   Lilian Audet  Kelly Cox  Sean Boylan Cash Posting Orders

Accounting for Investment Earnings  Investment Earnings are allocated to the SWIFT campus accounts  Allocated on quarterly basis  Campus records allocation in Pooled Investment Fund (CSU Fund 541) based on the CPO instructions  Income is allocated internally within campus funds according to that campus’ allocation policy  Net Income in the Pooled Investment Fund is zero at end of fiscal year  “no fund balance”  GAAP entry will be made to record June earnings and classify appropriately Investment Earnings

Accounting for Investment Earnings  Quarters are:  First Quarter = Jun, Jul, Aug  Second Quarter = Sep, Oct, Nov  Third Quarter = Dec, Jan, Feb  Fourth Quarter = Mar, Apr, May  Note: Campuses will receive an ADNOAT to record June earnings for GAAP adjustment purposes.  Benefits:  To record all investment earnings consistently across all campuses  To record in a timely manner for legal basis close Investment Earnings

Accounting for Investment Earnings  Campus investment earnings allocation are net of charges  Allowable Charges in the Pooled Investment Fund (CSU Fund 541)  Wells Fargo Bank charges  Investment Services  Chancellor’s Office Indirect support Investment Earnings

Accounting for Investment Earnings Campus Quarterly Earnings Accounting Entries 1)SWIFT allocation to Campus of $1,500,000  Debit Fund 541, Acct , Investments $1,500,000  Credit Fund 541, Acct , Income from External Investments $1,500,000 2)Wells Fargo Bank (WFB) charges to campus of $2,500  Debit Fund 541, Acct , WFB Charges $2,500  Credit Fund 541, Acct , Investments $2,500 3)CO Indirect Support charges to campus of $2,500  Debit Fund 541, Acct , CO Indirect Support$2,500  Credit Fund 541, Acct , Investments $2,500 4)Investment Services charges to campus of $10,000  Debit Fund 541, Acct , Investment Services $10,000  Credit Fund 541, Acct , Investments $10,000 Investment Earnings

Accounting for Investment Earnings Accounting Entries for campus allocation of interest to other funds 5)Campus investment earnings allocation to other funds $1,500,000 - $2,500 - $2,500-$10,000 = $1,485,000  Debit Fund 541, Acct , Income from External Investments $1,485,000  Credit Fund 541, Acct , Investments$1,485,000 Important! Fund Balance in CSU Fund 541 should be zero at year end  Credit balance in will equal the combined balance in , & so fund balance will net zero.  No due to or due from entries are allowed Investment Earnings

Accounting for Investment Earnings Accounting Entries for campus allocation of interest to other funds –con’t 6)In CSU Fund 485, CSU Operating Fund  Debit Fund 485, Acct , Investments$700,000  Credit Fund 485, Acct , Income from External Investments$ 700,000 7)Other CSU Funds in 0948  Debit to CSU funds, Acct , Investments $ 785,000  Credit to CSU funds, Acct , Income from Ext Investments $ 785,000 Important! For CSU Fund 485, Earnings must record in FNAT Key which uses FIRMS Project: INTAC RMP-Interest Income Activity Investment Earnings

Accounting for Investment Earnings  Campuses receive an ADNOAT July 27 th for their June net earnings  "Changes in Unrealized Gain/Loss" are no longer included in the monthly investment earnings calculation effective 7/1/2008. The unrealized activity will be held in the SWIFT pool clearing account for tracking purposes and then passed down to campuses for GAAP reporting.  no legal entry required Investment Earnings

Interagency Payments  When paying outstanding invoices, use wire transfers or ACH payments!!!  If a check must be cut, please mail checks out by Tuesday, 6/23 to be received by Tuesday, 6/30.  If payment is made after this date, please Accounting to verify that we have received the payment. If not, entries are needed so we all pass the manual FIRMS edit.  for payments to CSURMA  for all other payments  The CO will follow this same practice when paying campus outstanding invoices. Interagency Payments

How to Record CSURMA Expenses/Reimbursements  CSURMA expenditures need to be consistently recorded across the CSU  Non-Industrial Disability Leave (NDI) / Industrial Disability Leave (IDL) payments should be recorded to :Non-Industrial Disability & :Industrial Disability BUT the reimbursement (& YE Accrual) from CSURMA should be credited to :Insurance Claim NDI/IDL. Note: At year-end the sum of these accounts should net zero.  Unemployment Insurance (UI) payments to EDD should be coded to : Unemployment Compensation AND the reimbursement (& YE Accrual) from CSURMA should be a credited to Note: At year-end, should net zero California State University, Risk Management Authority (CSURMA)

How to Record CSURMA Expenses/Reimbursements  Payments to CSURMA for deductible amounts should be recorded to : Insurance Claim Deductible.  Should only be used for Deductible payments.  Account should tie back to all 4 quarter deductible amounts plus any property deductible entries made.  Dividends should be credited against the original premium expense in : Insurance Premium Expense California State University, Risk Management Authority (CSURMA)

IDL/NDI/UI Accruals AR to the Campuses & AP to CSURMA  Due to the interagency transactions between CSURMA and the campus, the recording of the IDL/NDI/UI activity needs to be properly communicated between both groups  Actual invoices or estimated accruals from the campuses should be ed to Mandy by  Either a pdf of the actual invoice or an listing the amounts  Campus MUST indicate what CSU fund that will record the accrual on their Legal books  When recording in 0948, the campus entry would be , Due from CSU TF CSU Risk Mgmt  A confirmation of these accruals will be included on the CO Interagency Receivables, Payables and Transfers ADNOAT published on or before July 7 th California State University, Risk Management Authority (CSURMA)

Deductible Recovery AP to the Campuses & AR to CSURMA The CSURMA Deductible Recovery ADNOATs will be posted no later than end of business on July 7 th The campus entry will be , Due to CSU TF CSU Risk Mgmt Our assumption is that the campuses will record this entry in 485. If not, Mandy Wong indicating in which CSU fund it will be This must tie so we all pass the manual FIRMS edit!!! California State University, Risk Management Authority (CSURMA)

Campus Loans  In a year where a Trust fund has no reserve balance and expenditures exceed revenues, the result is an overall deficit balance. In this case, a loan must be made from another self-supporting activity on the campus. The loan will not affect the fund balance, but will increase cash and create a liability.  A loan document should be created to specify the terms of the loan including the interest rate and repayment terms.  To book the entry initial loan:  Due to/from FIRMS Object Codes at the CSU Fund level for principal (ex & )  Do not use Transfer in/out to record Loan activity  : External Investments  To record the accrual of quarterly interest activity:  : Interfund Interest Expense / : Interfund Interest Revenue  Due to/from FIRMS Object Codes at the CSU Fund level (ex & )  To book the loan payoff:  Due to/from FIRMS Object Codes at the CSU Fund level for both principal and interest (ex & )  : External Investments Campus Loans

Change your payroll headers!!!  Prior period payroll activities occur in our old funds because the payroll headers on the adjustments still reflect our old data  Changes are needed to ALL payroll headers prior submission of payroll to the SCO  To correct prior period payroll activity form STD 407 (Changes in Payroll Header) must be completed and submitted to the SCO  No PFA will be accepted to move from 0001/0573/0580 to 0948  Campus Payroll Departments have access to the information needed to complete the form not Accounting. SCO Resource: Prior Year Payroll Activity

Definition and Usage  Reimbursed Activity can only be used in CSU Funds 485 or 499 for costs that are incurred by the university on behalf of a third party  Must not be used for campus regular, on-going activities.  Program code 1100 CAN be used for 2008/2009. Reimbursed Activities

SRB Audit Starts with FIRMS data  It is critical to ensure our legal data is consistently reported so that we have a smooth SRB audit.  There should never be any SRB-related activity recorded in CSU Fund 461: TF-Associated Student Body Trust  The CSU Fund is used to collect the ASB fee on behalf of the Associated Students auxiliary organization and transfers the funds to the auxiliary organization. Refer to RMP Implementation Guide #21 ASB Fee Document at #21 ASB Fee Document  ASB Fees are different from Student Union Fees. Student Union Fees should be captured in CSU Fund 534. The two fees should not be co-mingled.  There should never be any SRB-related activity recorded in CSU Fund CSU Fund 462: TF-Campus Union Operating Revenue Trust.  It has been eliminated and therefore all Student Union SRB entries should be recorded to CSU Fund 534: TF Campus Union- Operations and Revenue Systemwide Revenue Bond (SRB)

SRB Audit Starts with FIRMS data  CSU Fund 534: TF Campus Union-Operations and Revenue  Return of Surplus Check(s) to the Auxiliary Student Unions should be recorded to object code : Return of Surplus.  Please scanned copies of check(s) AND backup to Terri M. Williams  CSU fund 537: TF Auxiliary Org.-Operations and Revenue is mainly for SRB related activity.  If you have non-SRB transactions (Deposits held for an auxiliary org that is not a Campus Union) the PS fund need a special FNAT key, FNAT #  FNAT # for SRB Transactions Systemwide Revenue Bond (SRB)

CSU Fund 537: TF Auxiliary Org  For SRB Debt issued prior to 1/2008  Receipts of Auxiliary Base Rental Payments should be recorded as follows:  For principal payment:  Since no lease receivable is established in legal, record the payment in the new object code "auxiliary lease principle payment", mapped to GAAP account  For interest payment:  Use the existing object code "Income from external investments", mapped to GAAP account  Please do NOT record May and June accrual of the Auxiliary Base Rental interest payment in legal. This will be a GAAP accrual. Systemwide Revenue Bond (SRB)

CSU Fund 537: TF Auxiliary Org  For SRB Debt issued after 1/2008 through a loan rather than a lease:  Due to the approval of Senate Bill 855 which provides the authority to issue bonds on behalf of auxiliaries  Since the loan is between CO and the auxiliary directly, campus acts as an agency only and the receipt of auxiliary base rental payments should not have a P&L impact to campus book.  Receipts of Auxiliary Base Rental Payments and interests should be credited the object code unclear collection (other current liability).  When the payments and interests are remitted to CO, debit the object code (other current liability). Systemwide Revenue Bond (SRB)

Student Union Decentralization  The Student Union Decentralization will cause the campus SAM99 report to be out of balance in some SCO funds. The CO SAM99 will also be out of balance for those same funds in an equal amount but in the opposite direction. On a systemwide basis the combined SAM99 errors will net zero for each SCO fund involved.  Please refer to the AD NOAT , , , , , , & for recording information and supporting documentation to our SAM99 reconciliation  Those campuses are:  Northridge, Fullerton, Chico, San Francisco, San Diego, San Luis Obispo, & San Jose  For specific questions regarding this issue please contact:  Brian Lee:  Lead Revenue Bond Accountant  (562) or Systemwide Revenue Bond (SRB)

Fund Balance Clearing Adjustments  Fund balance adjustments for the CSU Dormitory Revenue fund (SCO Fund 580) and the CSU Dormitory Building Maintenance and Equipment Repair Fund (SCO Fund 0575) due to Prior Year out of Balances that resulted in Errors to the Fund Balance Clearing Account.  This will cause your SAM99 to be out of balance  Please refer to the Code AD NOAT for the supporting documentation to be included in our SAM99 reconciliation  For specific questions regarding this issue please contact:  Brian Lee:  Lead Revenue Bond Accountant  (562) or Systemwide Revenue Bond (SRB)

Spend Down!!  580: Calif State University Dorm Revenue Fund (DRF)  Spend down by 6/30 OR November Debt Service will consume ALL of the CSU’s remaining balances!!  If you have other plans please notify:  Terri M. Williams  Revenue Bond Accounting and Financial Reporting Supervisor  (562) or  Brian Lee:  Lead Revenue Bond Accountant  (562) or  Continue to spend down 575: State College Dorm Bldg Maint and Equip Res Fund.  No systemwide plan yet but we are still thinking! Systemwide Revenue Bond (SRB)